New federal student debt relief program expected this fall

WASHINGTON (NEXSTAR) — The Department of Education is giving borrowers eligible for a revamped student loan forgiveness program until the end of August to opt out.

U.S. Education Under Secretary James Kvaal said eligible borrowers who want relief will not need to apply and will be automatically enrolled in the program.

But first, the plan needs to be finalized. Kvaal said he expects the rule making process to wrap up this fall.

“Our goal is to finish, in October, and to start bringing relief to as many students as possible as quickly as possible,” Kvaal said.

According to the draft rules, the program under consideration will offer partial or full debt relief to borrowers who now owe more than they originally took out thanks to “runaway interest.”

The Department of Education estimates nearly 23 million borrowers, the majority of Pell Grant recipients, would benefit. The plan also promises relief to borrowers who have been making repayments for more than 20 years.

“We don’t think that’s right. Student loans aren’t intended to be a life sentence,” Kvaal said. “We’re working hard to reach as many people as possible.”

Heritage Foundation Higher Education Reform Fellow Adam Kissel said he expects the Biden administration, eager to sway favor with young voters, will attempt to begin forgiving student loan debts before Election Day.

Kissel said the Biden administration’s August 30th opt out deadline is merely a legal strategy to try and dodge inevitable lawsuits.

“This is definitely a move to make sure that anyone who wanted to opt out, could opt out and stop them from having standing from challenging the loan forgiveness,” Kissel said.

Kissel said he believes loan servicers will have standing to challenge the rule. He expects Republican attorneys general to act swiftly in court to block the program from going into effect.

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